Spain Economic Outlook. November 2023

Summary

Spain's GDP growth forecast is maintained for 2023 (2.4%), revised downwards to 1.5% in 2024 and is expected to accelerate in 2025 (2.5%). The growth bias is negative due to the geopolitical context and uncertainty in EMU activity and economic policy measures.

Key points

• Key points:
• World growth will continue to slow due to tight monetary policies, less expansionary fiscal policies, moderating labor markets and lower excess savings. Global growth is projected to slow to 3.0% in 2023 and 2024.
• In Spain, economic growth in 2023 will be 2.4%. The slowdown is less intense than expected. Employment, especially in services not related to public administrations or tourism, is sustaining activity.
• Growth forecast for 2024 revised downward due to deteriorating activity in europe. Uncertainty about economic policy could intensify. The increase in labor costs, in tax burden and the effects on the cost of financing the Spanish Treasury due to possible changes in inter-government debt will be relevant.
• Economic activity is expected to accelerate in 2025, in line with the recovery in the EMU. The tourism sector could have a greater capacity for growth. Inflation falls in line with expectations. Consumption could show moderate strength. The working-age population continues to increase, allowing for employment growth.
• The necessity of reforms that increase investment, reduce unemployment, as well as improve productivity and wages, is accentuated. A medium-term fiscal consolidation plan, combined with favorable regulation and taxation will be key.

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